Stockchase Opinions

Jason Zandberg Liquor Barn Income Fund LBN.UN-T DON'T BUY Sep 07, 2006

This sector has very low yield. Valuations are pretty high. Competition from a similar company. Growth by acquisition.
$12.000

Stock price when the opinion was issued

specialty stores
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WEAK BUY
Has about 60 stores in Alberta and British Columbia. Prefers Liquor Stores Income Fund (LIQ.UN-T), which is larger. They expect to grow through accretive acquisitions. Still in the process of integrating 8 companies.
DON'T BUY
Because of the change of income tax on trusts, they can no longer make acquisitions, so the multiple will shrink over time.
DON'T BUY
This was a business that depended on the high valuation that they got as an income trust. Not only will they be taxed with no shield, but the ability to make acquisitions has been reduced.
WAIT
Perfect model for a trust. Located in the best part of the country, Alberta. Has come off quite a bit. Would wait until after the budget later this month.
COMMENT
Possible acquisition by Liquor Stores Income Fund (LIQ.UN-T). Lost money in the 1st quarter. Liquor Stores will create better margins.